What strategic options are open to marketing businesses when wanting to deal with the problems of Non-tariff barriers in economically developed and industrialized countries? Choose at least one industrialized country to illustrate the points made.
Tariffs have always played an important role in generating revenue for the country. In the majority of the under developed countries, tariffs plays an important role in developing the monetary policies of the country. For political reasons, tariffs are applied on imports, but sometimes also, they are applied on exports. It is usually the easiest form of earnings generations.
When a shipment occurs the border of the country, the custom officers analyze the products and charge tax on it based on the formula. Since the goods cannot enter in the country without the written authorization of the tax authorities, thus it's very easy to acquire the duty.
Nowadays the free trade organizations discourage the tariffs applied on the products. World trade organization (WTO) has played an important role in persuading the countries in reducing the tariffs imposed. But nowadays countries are more focused on the non-tariff trade barriers. These barriers are imposed on countries which do not comply with the rules laid down by the world trade organization.
Tariff barriers to trade:
Tariffs are the restrictions imposed by the united states on the imports and exports of goods and services. Tariffs will always be used as an instrument to increase the revenue generation and to protect the local industry from the foreign competition.
There are different types of tariffs which is often imposed by a country but the most common one are as follows.
Ad valorem: it is defined based on the percentage of the value of the merchandise being imported into the country. But sometimes it isnt that useful because if the international price of the commodity decreases, than the tariff applied on it also reduces.
Specific tariff: it is the specific amount of money that imposed on a product. Thus if the price of the product decreases than it generally does not affect the tariff.
Revenue tariff: this type of tariff is imposed specifically to create revenue for the united states. E. g. in case a country does not grow coffee, than the government can impose a duty on the import of coffee beans to generate revenue.
Prohibitive tariff: this kind of tariff is imposed to restrict the import of a particular product. Usually the tax imposed is so high that it's almost impossible for the firms to import or export the merchandise.
Protective tariff: this type of tariff is imposed to specifically protect the neighborhood industries from the foreign influence. All of the governments use this option to facilitate the local industries from the foreign competition.
Environmental tariff: this type of tariff is imposed on the imports and exports to the countries which have substandard environmental controls. These types of tariffs are also called eco-tariffs or green-tariff
Retaliatory tariff: this type of tariff is based upon revenge. E. g. if USA impose a tariff on Chinese imports than the China will also impose a tariff on the imports from USA. Sometimes countries utilize this option to influence the tariffs imposed by other countries.
Non-tariff trade barriers:
Non-tariff trade barriers are the types of barriers that happen to be imposed by way of a country to restrict the imports however they are not like the most common tariff barriers. Some common examples of the Non-tariff barriers are anti-dumping measures and countervailing duties.
The use of non-tariff barriers have significantly increased over the past few years due to work done by World Trade Organization (WTO) to reduce the tariff barriers imposed by different countries. Some Non-trade barriers are permitted in limited circumstances, in particular when it must protect health, safety, sanitation or natural resources. but generally it is criticized since it violates the free trade rules set by the Worlds Trade Organization (WTO), the European Union (EU) and UNITED STATES Free Trade Agreement (NAFTA).
Examples of Non-tariff Barriers:
The most frequent examples of non-tariff barriers are as follows.
Ban on imports
General/product specific quotas.
Rules of origin
Additional trade certificates like Certificate of origin, Certificate of Authencity.
Dealing with the Non-tariff barriers:
We are living in a very competitive environment. All of the companies on the planet are working hard to truly have a competitive edge over one another. Tariff and Non-tariff barriers play an important role in attaining the entire goal of the business in the foreign and domestic market. If a company wants to enter a foreign market, it has to develop a technique to enter into the market and makes profit. Governments use the Non-tariff barriers to facilitate the neighborhood industry from the foreign competition and also impose duty on the products to create revenue.
China has been one of the fastest growing economies on earth. For the last three decade, chinas economy has grown at approximately 10 percent per year. The primary reason of chinas success is that it has considerably penetrated into the foreign market while protecting its local industry. Most of the western countries and independent think-tanks blame china for manipulating with its currency and use cheap labor to boom it exports. China has very strict barriers on imports. A firm has to proceed through very strict procedure to get in to the local market. (http://www. iie. com/publications/papers/lardy0507. pdf).
China has imposed a lot of Non-trade barriers on the imports from the foreign countries. This has played an important role in developing the neighborhood industries. The Chinese government has helped the local industry to improve its efficiency giving them financial and tax relief. The imports from China have drastically damaged the American manufacturing industries. However the imports from China has significantly increased in US but US exports isnt catching up at the same ratio. This has caused a huge trade deficit between the US and Chinese trade. Now USA has imposed anti dumping tariff on Chinese products.
Recently the united states international trade commission has ruled that the Chinese imports are hurting the American organizations by selling the oil well pipes at a very low rate. Thus the Chinese steel pipe producers will face anti dumping tariffs as high as 99. 14 %. This type of tariff barrier is named protectionist barrier. This sort of move can damage the relationship between your countries. (http://www. e-to-china. com/tariff_changes/data_tariff_changes/2010/0505/78017. html).
The request for protection imports have significantly increased through the 2009. Many countries are targeting Chinese producers/exporters and trying to limit the imports from China to help their local industries to grow.
(http://www. e-to-china. com/tariff_changes/data_tariff_changes/2010/0505/78017. html)
To conclude we can say that non-tariff barriers play an important role in the income generation of the united states. A lot of the countries use tariff and Non-tariff barriers to safeguard their local industries and to generate revenue. The most frequent type of Non-tariff trade barrier is protectionist barrier. Governments utilize this option to protect their local industries from the foreign competition.
Tariff has been utilized by countries to create income but sometimes it may also be used for political gain. Some countries can use these tariffs to unfairly restrict the imports from certain countries for personal reasons. Thus World Trade Organization played an important role in persuading the member nations to lessen the tariffs.
This move has not only encouraged the trade between the countries but also helped in increasing the friendly relationship.
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